With Obama planning to meet with bipartisan congressional leaders at the White House tomorrow, three main factions have formed in the Senate, none of which has the 60 votes needed to advance an estate-tax proposal. One includes Republicans such as South Carolina’s Jim DeMint who favor permanent repeal. Another is led by Democrats including Majority Leader Harry Reid who support a top rate of 45 percent that would apply after a $3.5 million tax-free allowance. . . .

A third faction, led by Arizona Republican Jon Kyl and Arkansas Democrat Blanche Lincoln and embraced by Republican leader Mitch McConnell of Kentucky, backs setting the top rate at 35 percent after a $5 million exemption.

Donmoyer also lays out the arguments of proponents and opponents of the estate tax.

Donmoyer’s article has received harsh criticism. In Another Ryan Donmoyer Cheap Shot (The Future of Capitalism, 11/29/2010), Ira Stoll wrote, “[T]he goal of the article doesn't seem to be accuracy; the goal seems to be mocking opponents of the estate tax. It's outrageous. . . . [T]he treatment of Mr. Harbert in the Bloomberg article is a caricature.”

(I found Donmoyer’s article to be timely and informative. You can read the article and its critique it and reach your own conclusion.)

With regard to the federal estate tax S.3773 provides for a 35% estate tax rate; a unified estate/gift exemption amount of $5 million (per individual), indexed for inflation; and a stepped-up basis for inherited assets. For the year 2010, estates would be able to elect to retain the zero rate and carry-over basis of current law (and capital gains tax would apply to the carry-over basis when the asset is sold) or choose the stepped-up basis structure. For the estates of individuals dying after 2010, assets would receive a stepped-up basis and be subject to a 35% tax rate (with a unified estate/gift exemption of $5 million, indexed for inflation).

In this video, Sen. McConnel discusses S. 3773 (but does not specifically mention the estate tax). More importantly, Sen. McConnel highlights the general divide between Republicans and many Democrats regarding taxes and the economy:

09/14/2010

Lieberman, who is returning to Washington today after the end of the summer recess, said he expects the immediate focus will be on the leader of the Senate Republican minority, Mitch McConnell of Kentucky.

"That's the interesting drama in our story today and tomorrow, which is what will Senator McConnell do on John Boehner's statement yesterday," Lieberman said. "I think if Sen. McConnell agrees, we can extend most of the tax cuts for at least a year, then leave us to argue about higher income tax cuts and the estate tax in the lame-duck session.

With less than fours months before the estate tax returns to levels not seen in nearly a decade, Senate Minority Whip Jon Kyl (R-Ariz.) said little progress has been made on the issue.

"I don't think the Democratic leadership has figured out how to approach the whole tax issue, and that [the estate tax] is a big part of it," he told reporters Monday. "Nobody has talked to me about it, and they know that [Sen. Blanche Lincoln (D-Ark.)] and I are the two that have been pushing reform."

02/11/2010

A February 10, 2010 article by Walter Alarkon, Jay Heflin, and Alexander Bolton -- Reid: Jobs bill to come with Republican help (The Hill) -- informs that in the Reid-McConnell talks, the Senate Minority Leader "is demanding a time certain" for addressing the estate tax:

Senate leaders are working on an estate tax deal that could make it easier to move a bipartisan jobs bill. A deal being discussed by [Senate Majority Leader Harry Reid (D-Nev.)] and [Senate Minority Leader Mitch McConnell (R-Ky.)] involves moving an estate tax bill through the Senate that would prevent a huge hike in the tax from taking effect in 2011, staffers and lobbyists say.

The agreement would provide needed Republican votes for Reid on the jobs bill and stop the estate tax from returning to a historically high level.

However, McConnell is demanding a time certain on when the estate tax would move before agreeing to any deal on the jobs bill.

Senate leaders are working on an estate tax deal to make it easier to move a bipartisan jobs bill.

The deal discussed by Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) involves moving an estate tax bill through the Senate that would prevent a huge hike in the tax from taking effect in 2011, staffers and lobbyists say.

For Reid, it could provide crucial Republican votes for the jobs bill in a Senate where Democrats now have only 59 votes. Republicans would get a vote on legislation to stop the estate tax from returning to a historically high level.

The exact nature of the deal is still subject to negotiations, and the final details of a jobs bill are unclear. But the basic deal would involve Republicans providing enough votes on the jobs bill to give it the 60 votes necessary to clear procedural hurdles in exchange for a vote on the estate tax. . . .

Lobbyists say the Reid-McConnell talks have been fruitful, but historic snows in Washington have delayed a final decision on when an estate tax fix might move.

The rest of Heflin's article explains some of the alternatives regarding the federal estate tax.